Wayanad, Kerala: The Union Government on Wednesday sanctioned an additional central assistance of Rs 1,554.99 crore under the National Disaster Response Fund (NDRF) to five states affected by floods, flash floods, landslides, and cyclonic storms during 2024.

Out of the total amount, Andhra Pradesh received Rs 608.08 crore, Nagaland Rs 170.99 crore, Odisha Rs 255.24 crore, Telangana Rs Rs 231.75 crore and Tripura Rs 288.93 crore, as per the statement by the Union Home Minister Amit Shah.

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Kerala, which was hit by a massive landslide, probably one of the largest in the country, finds no place in the aid. Last week, the Centre had announced a ‘loan’ of Rs 529.50, instead of aid, to the southern state with stringent stipulations, drawing sharp criticism from the ruling and opposition fronts in the state.

Given the scale of destruction, state government had requested a special package of Rs 2,000 crore for the Wayanad rehabilitation project, and has been pushing the Centre for the financial assistance to rebuild the disaster-hit area. However, the Centre chose to allot an interest-free loan,  along with a stipulation that amount should be used by March 31, 2025, asking to implement 16 projects for rehabilitation of victims.

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After the catastrophic landslides in Wayanad that claimed over 250 lives, left many untraceable, and destroyed an entire locality, Prime Minister Narendra Modi visited the disaster-hit area, pledging support for the rehabilitation. Against the demand of Rs 2,000 crore, the Centre allowed a ‘loan’ of Rs 529.5 crore, a fraction of what has demanded for the monumental task of restoring the dismantled Wayanad.

It is reported that the 2024-2025 allocations from the National Disaster Response Force (NDRF) and State Disaster Response Force (SDRF) show a weakened support for the southern state, amplifying concerns of purported financial neglect towards the non-BJP-ruled states.

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The Centre has also directed Kerala’s Additional Chief Secretary (Finance), Dr. A. Jayathilak that funds under the capital investment loan must go directly to beneficiaries, with no diversion allowed. The projects for Wayanad rehabilitation include a township for landslide victims and construction of public roads and buildings. Additionally, the impractical deadline is further claimed to be a measure that crunches the state, with just 45 days to utilise the loan.

Finance Minister K. N. Balagopal said the State government will ask the Centre for more time to use the Rs 529.5 crore loan amount for Wayanad rehabilitation. The Finance Minister had also criticised the Union Budget for ignoring majority of the demands the state has put forward. Kerala Chief Minister Pinarayi Vijayan echoed similar sentiments, and argued the Centre has only gave a loan to be repaid and failed to provide the financial assistance it deserves, pointing out that the state is number one in various areas and is a proud part of India.

Perturbed by Centre’s attitude, Chief Minister asked whether Kerala was not part of India. “What was our fault? Are we not part of this country? Do we not deserve to be a part of it?” Pinarayi Vijayan said. The Union Government is obliged to provide funds, he further added. Meanwhile, Revenue Minister K. Rajan has termed Centre’s loan aid as scary and cruel joke. Instead of giving unconditional financial assistance rightfully deserved by Kerala, the Centre has only given a loan with stringent conditions, the minister pointed out.

Leader of Opposition VD Satheeshan stated the Union Government’s decision to provide only a tied loan of Rs. 500 crore for Wayanad rehabilitation is a “grave injustice” and “far from Kerala’s request for a Rs 2000 crore special package”. He further highlighted that setting March 31 as deadline has added insult to injury, a move went against the spirit of federalism.

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Dr. Godvin S. K., Treasurer of the Kerala Economic Association, founding member, and Secretary of the Indian Health Economics and Policy Association (IHEPA), lambasted the Centre, saying that the fundamental problem is disaster-related assistance should be provided as aid, not as a loan. “Even if it is interest-free, it is still treated as a loan, which impacts the state’s fiscal burden in the long run. This should have been sanctioned much earlier. The other concern is that it may affect the eligibility criteria for borrowing funds in the future,” The South First quoted Godvin.

Notably, a state’s total borrowing in a year should not exceed 3.5 percent of its domestic product, raising concerns whether this loan a state’s total borrowing in a year should not exceed 3.5 percent of its domestic product. If it is counted in the loan limit, it would further lead to deeper crises. Godvin further alleged that it’s more of a political decision as there is no economic logic behind it, and it doesn’t deserve any justification. “It could be justified if we received aid first, and then additional expenses could be covered by a loan,” he opined. 

The disaster victims have also expressed concern over the Centre’s loan sanction, as they had hoped for some substantial project for their rehabilitation from the Union Government.